Ladies and gentlemen, thank you for standing by, and welcome to the Gaotu Techedu Third Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to your first speaker today, Ms. Catherine Chen, Head of Investor Relations. Please go ahead Catherine.

Thank you, operator. Good evening, everyone. Thank you for joining Gaotu's third quarter 2024 earnings conference call. My name is Catherine, and I'll help host the earnings call today. Gaotu's earnings release for the quarter was distributed earlier and is available on the company's IR website at ir.gaotu.cn, as well as through PR newswire services. Joining the call with me tonight from Gaotu senior management is Mr. Larry Chen, Gaotu's Founder, Chairman and Chief Executive Officer, and Ms. Shannon Shen, Gaotu's Chief Financial Officer. Larry will first provide the business highlights for the quarter, and then afterwards, Shannon will discuss our financial performance in more detail. Following their prepared remarks, we'll open the floor to questions from analysts. Before we begin, I'd like to remind you that this conference call will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current beliefs and expectations, as well as the current market and operating conditions, and they involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control and may cause the company's actual results, performance or achievements to differ materially from those contained in any forward-looking statements. Further information regarding this and other risks is included in the company's public filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements, except as required under applicable law. During today's call, management will also discuss certain non-GAAP measures for comparison purpose only. For a definition of non-GAAP financial measures and reconciliation of GAAP to non-GAAP financial results, please refer to our third quarter earnings release published earlier today. As a reminder, this conference is being recorded. In addition, a live and archived webcast of this conference call will be available on Gaotu's IR website. It is now my pleasure to introduce our Founder, Chairman and Chief Executive Officer, Larry. Larry, please.

Good evening and good morning, everyone. Thank you for joining us on Gaotu's third quarter fiscal year 2024 earnings conference call. I would like to take this opportunity to express my gratitude to each of you for your interest and support of Gaotu. Before I start, I would like to remind everyone that all financial figures discussed today are quoted RMB unless stated otherwise. During the past quarter, our core businesses continued to make steady progress with the gross balance increasing by 67.2% over the year to approximately RMB 1.1 billion, and revenue growing by 53.1% year-over-year to over RMB1.2 billion. This growth is attributed to our keen understanding of market trends and the continuous optimization of our strategy and execution. As our business scales rapidly and the product matrix enriches gradually, we ramped up investments with a particular focus on upgrading our educational systems, enhancing organizational capabilities and improving management practices. We also intensified efforts in talent development and professional training. In the course of business development and refinement, we have nurtured and promoted high performing frontline and managerial talent from within, while also attracting seasoned professionals from the broader industry. This has enhanced our team's ability to navigate various complex business environments and improve execution efficiency. In this quarter, we allocated more than 120 million for share buybacks, underscoring our strong commitment to shareholder returns. While this share repurchase has impacted our cash balance, our liquidity position remains solid and robust. As of September 30, 2024, we held a total of over $3.3 billion in cash, cash equivalents, restricted cash, and short-term and long-term investments, providing a firm foundation for our strategic priorities and long-term growth. Next, I will provide an update on the program we have achieved this quarter. First, we further enhanced our educational products, learning…

Thank you, Larry. And thank you, everyone, for joining our call today. I will now walk you through our operating and financial performance for the third quarter of fiscal year 2024. In the past quarter, we capitalized on the robust market demand during the summer vacation period, successfully achieving our growth-filling targets aimed at rapid business growth and driving meaningful increases in student enrollments and market share. With a continuous rise in student enrollments, growth in our top line has accelerated sequentially in each of the past three quarters. In the third quarter, our revenue increased 53.1% year-over-year and grew by approximately 10 percentage points sequentially. As of September 30, 2024, our deferred revenue balance increased 89.0% year-over-year to over RMB1.4 billion. Looking ahead, we anticipate year-on-year revenue growth to peak in the fourth quarter with our core online businesses set to outpace the broader industry, further consolidating our leading position in the market and laying a strong foundation for future growth. While continuing to strengthen the core competence of our online products, we are actively deploying resources to explore and expand into diverse educational offerings. This approach helps us better address students' learning needs across various scenarios, expanding our addressable market and enhancing user engagement. We are focusing on segments with clear user demand, strong willingness to pay, and proven business models. Additionally, we are utilizing advanced technologies like artificial intelligence to continuously optimize both teaching quality and operational efficiency. Although these investments may weigh on our financial results in the short term, we remain committed to refining our operations and dynamically tracking key business metrics to effectively balance investments and returns. We believe these educational offerings with great growth potential will further boost our market share and brand recognition, supporting long-term revenue expansion and value creation for our…

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Crystal Li with CMS. Please go ahead.

Thanks management for taking my questions. I saw you provided the growth guidance for growth revenue in the third quarter. How about the growth by different business segments? And could you give us some color on 2025 growth outlook?

Thanks, Crystal. From the current perspective, looking at the overall operational performance in 2024, we observed two primary deviations from the expectations we set at the beginning of this year. First, the adjustments in the psychological consulting segment within the educational services for college students and adults impacted by the certification requirements which led to a revenue shortfall compared to the projections we performed at the beginning of the year. And second, some of our innovative efforts in traditional education services did not fully exceed our expectations. And also in the second half of the year, we are navigating a period of subdued economic growth accompanied by a more cautious consumer spending environment, together with the [indiscernible] social platforms further handed the recovery of the gap. And also our loss in 2024 has widened. On one hand, our increased investments in the offline operations and overseas study services while creating short-term pressure, actually strategic decisions aimed at long-term growth. We believe these efforts will eventually generate better returns for our students and shareholders and create the value we provided. And on the other hand, our handling of explosive business opportunities in the first half of the year, [indiscernible] in resource allocation during the period of rapid growth, which also contributed to the current loss as well. So looking ahead to 2025, we will take a more dynamic approach to balancing, scaling investment and the profitability. Our focus will be on expanding the profit base and improving our operating profit margins in our existing business. Also, at the same time, we will be optimizing fixed cost structures such as research and development expenses and also G&A expenses. And we will be continuously driving cost reductions and the efficiency improvements. So we expect both gross billings and the revenues to achieve steady growth in 2025 with a significant reduction in losses. And during this period, we will also strive to enhance shareholder value and continue to execute the share repurchase plan under the guidance of our Board of Directors. And hope that address your questions. Thanks, Crystal.

Thanks a lot. This concludes our question-and-answer session. I would like to turn the conference back over to Catherine Chen for any closing remarks.

Thank you, operator, and thank you everyone for joining the call today. If you have any further questions, please don't hesitate to contact our Investor Relations Department, or our management via email at ir@gaotu.cn directly. You are also welcome to subscribe to our news alert on the company's IR website. Thank you very much again for your time. Have a great night.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.